As US farmer sentiment improves, low livestock prices worry producers

The latest Purdue University/CME Group Ag Economy Barometer Index climbed 8 points to 113 points in July after it had drifted to 105 points in June. This is because all three broad-based measures of farmer sentiment improved in July, despite prices for some commodities falling during the survey period.

Specifically, the Index of Current Conditions increased 10 points to 100 and the Index of Future Expectations rose 7 points to 119.

Producers’ biggest concern in the year ahead remained input costs (chosen by 34% of those surveyed) but weak commodity prices, particularly crop and livestock prices, were not far behind at 29%, up from 25% in June. At the same time, interest rates were less of a concern for producers, with just 17% (down from 23%) citing this as their top concern.

The effect of weakening commodity prices combined with high input prices resulted in a weaker Farm Financial Performance Index, which was down 4 points to 81 and 6 points lower on a year ago. The Farm Capital Investment Index also rose 6 points in July but remains 7 points down than a year ago.

There was also a positive improvement in the Short-Term Farmland Value Expectations Index, up 3 points to 118, thanks to more respondents saying they expect farmland values over the next year to stay the same and fewer – that they expect values to rise or fall.

James Mintert and Michael Langemeier of the Purdue Center for Commercial Agriculture reflected that the improvement in sentiment was ‘puzzling’ ‘in part because prices for principal commodities weakened from mid-June to mid-July.

“Looking ahead, producers continue to express concerns about high input costs and declining prices for crops and livestock,” the authors reflected. “Producers in July were somewhat less concerned about the impact of interest rates on their farm operations, and that could be a reason why their outlook on capital investments improved modestly.

“Despite this month’s improvement in their investment perspective, farmers’ outlook on capital expenditures remained weak from both a long-term perspective and compared to a year ago. Finally, looking ahead to 2025, nearly three-fourths of crop farmers in this month’s survey said they expect farmland cash rental rates to remain about the same as in 2024.”